Capital Thinking Update - May 30, 2011

    View Authors 30 May 2011

    General Legislative
    The House convenes on Tuesday, May 31, and is expected to take up the Veterans Appeals Improvement Act, among other legislation. The Senate will observe its Memorial Day recess until 4:30 p.m. on Monday, June 6, when it will proceed to consideration of the nomination of Donald B. Verrilli, Jr. to be Solicitor General of the United States.


    Budget, Appropriations

    LEGISLATIVE ACTIVITY

    • Senate FY2012 Budget Votes. The Senate held four procedural budget votes this week, all of which failed: (1) The House Republican budget was rejected 40-57, with five Republican Senators joining Democrats in opposing the measure – Scott Brown (R-MA); Susan Collins (R-ME); Olympia Snowe (R-ME); Lisa Murkowski (R-AK); and Rand Paul (R-KY). Senators Pat Roberts (R-KS), Kay Bailey Hutchison (R-TX) and Charles Schumer (D-NY) did not vote; (2) President Obama’s FY2012 budget proposal was rejected unanimously 0-97; (3) Senator Paul’s aggressive proposal to balance the budget in five years, including the elimination of the Commerce, Education, Energy and Housing and Urban Development Departments, failed 7 -90; and (4) the proposal by Senator Patrick Toomey (R-PA) to balance the budget in nine years was rejected 42-55.
    • House Vote on Increased Debt Limit. Republican House leaders will bring up a measure next week to increase the debt limit by $2.4 trillion. This will be a symbolic vote intended to demonstrate the need to include spending cuts as part of any package to increase the debt limit.
    • House Appropriations Activity. On Tuesday, the House Appropriations Committee approved the Homeland Security and Military Construction-Veterans Affairs bills after including an additional $1 billion to the Homeland Security bill for FEMA disaster relief. The Agriculture Subcommittee also approved its FY2012 spending bill, which is scheduled for full committee markup on Tuesday, May 31. Also next week, the Defense, Energy & Water, and Legislative Branch Subcommittees are scheduled to markup their FY2012 measures.

    OTHER BUDGET, APPROPRIATIONS NEWS

    • Bi-Partisan Deficit Reduction Panel. The bi-partisan panel led by Vice President Joe Biden continues to hold meetings aimed at reaching a consensus on a near-term plan to reduce the deficit by raising the debt ceiling and enacting spending cuts. With approximately 10 weeks left to come up with a plan, the six negotiators currently have agreed on cuts of $150 billion over 10 years. Earlier this week, both Vice President Biden and House Majority Leader Eric Cantor (R-VA) expressed optimism that the group could reach an agreement on $1 trillion in spending cuts. Differences remain on how to get there, with Democrats pushing to increase revenues and Republicans staunchly opposed.
    • Gang of Six. In the wake of Senator Tom Coburn (R-OK) deciding to withdraw from the group, remaining members expressed optimism that they could come up with a long-term debt relief proposal and vowed to continue their efforts.

     


    Education

    LEGISLATIVE ACTIVITY

    • ESEA Reauthorization. On May 25, the House Committee on Education and the Workforce considered its first Elementary and Secondary Education Act (ESEA) reform bill, H.R. 1891, “Setting New Priorities in Education Spending Act." Despite opposition from Democratic Committee members, the bill was adopted along party lines (23-16) and will eliminate more than 40 federal education programs under the Act. It was the first in what is expected to be a series of measures on education reform bills. A hearing is scheduled on Wednesday, June1, titled, "Education Reforms: Exploring the Vital Role of Charter Schools."

    REGULATORY ACTIVITY

    • Education Accessibility. The Department of Education clarified earlier guidance provided to college and university presidents requiring greater accessibility of classroom devices to disabled students. The Department included online courses and their content as part of the clarification.
    • Race to the Top. In response to the continuing resolution passed in April, this week the Department announced plans to implement its $700 million Race to the Top Initiative, which seeks to encourage and reward States for creating the conditions for education innovation and reform. The FY2011 program will consist of two state-level competitions: $500 million will support the Race to the Top-Early Learning Challenge, while $200 million will be available to those finalists that did not win grants in the first two rounds of the competition.
    • The Condition of Education 2011. On Thursday, May 26, the Department of Education’s National Center for Education Statistics released a Congressionally-mandated report on education in America today, covering topics in elementary and secondary education as well as postsecondary education.
    • Default Rates. Draft FY2009 student loan default rates announced by the Department of Education indicate that the default rate increased by nearly 2 percent (to 8.9 percent) over the previous year. The official default rate will be published in September 2011.

     


    Energy

    LEGISLATIVE ACTIVITY

    • Offshore Drilling. Chairman Jeff Bingaman (D-NM) delayed until at least June a Senate Energy and Natural Resources Committee markup of his legislation to improve and expand offshore drilling activities. Even if the Chairman can reach an agreement to garner the support of Ranking Member Lisa Murkowski (R-AK) and work through a long list of potential amendments, the bill would still face long odds in reaching the floor this year as Congress grapples with raising the federal debt ceiling and agreeing to a FY2012 budget.  
    • Energy Legislation. The Senate Energy and Natural Resources Committee is also expected to markup legislation to promote electric vehicles and small nuclear reactors next month.
    • Congressional Hearings. A House Energy and Commerce Subcommittee will hold a legislative hearing on draft cybersecurity legislation, the “Grid Reliability and Infrastructure Defense Act,” on Tuesday, May 31. On Wednesday, June 1, the House Natural Resources Committee will hold a second hearing on roadblocks to siting wind and solar energy projects on public lands and waters, from the industry’s perspective.

    REGULATORY ACTIVITY

    • Oil and Gas Royalty Reforms. There is a Tuesday, July 26 deadline for comments on an advance notice of proposed rulemaking to streamline regulations in how royalties from oil and gas produced on federal lands and waters are calculated. Public hearings will be scheduled thereafter. Interior Secretary Ken Salazar indicated that the current transactional system is overly complex and time-consuming; the Office of Natural Resources Revenue is proposing to use geographically-based market prices instead.
    • Coal Royalty Reforms. The Interior Department is also proposing to change how the federal government values coal produced from Federal and Indian leases. Public comments on that advanced notice of proposed rulemaking are due by Tuesday, July 26, with public hearings to follow.
    • Hydrokinetic Project. Comments on a proposal by Florida Atlantic University to test hydrokinetic equipment in Florida’s waters are due by Thursday, June 23. If approved by the Bureau of Ocean Energy Management, the lease will be the first to test ocean current equipment to generate electricity on the Outer Continental Shelf.
    • Electric Transmission. Comments on the Federal Energy Regulatory Commission’s notice of inquiry regarding incentive rates to promote transmission investments are due by Tuesday, July 26.

     


    Environment

    LEGISLATIVE ACTIVITY

    • Alaskan Oil and Natural Gas Resources. On Thursday, June 2, the House Natural Resources Committee, Subcommittee on Energy and Mineral Resources will hold an oversight hearing titled, "Domestic Oil and Natural Gas: Alaskan Resources, Access and Infrastructure." The hearing will focus on domestic oil and natural gas permitting, access to federal oil and natural gas resources in the National Petroleum Reserve Alaska (NPRA), keeping the Trans Alaska Pipeline System (TAPS) full and operational, and prospects for, and permitting of, offshore energy production.

    REGULATORY ACTIVITY

    • President’s Regulatory Relief Plan. The White House has outlined the results of the President’s retrospective analysis of existing regulation and is putting forth a strategy for reducing burdens and promoting economic growth, as announced earlier this year. With the release of the strategy, known as the “regulatory look-back plans,” the Administration is taking steps to reduce burdens on individuals, small businesses and state and local governments, while maintaining health and safety protections. Hundreds of ideas for updating the regulatory framework across all agencies are suggested in the plans. Highlights concerning the environment include:
      • The EPA will propose to eliminate the redundant obligation for many states to require air pollution vapor recovery systems at local gas stations because modern vehicles already have effective air pollution control technologies. The anticipated savings over the next decade is about $670 million.
      • The Department of the Interior is reviewing outdated regulations under the Endangered Species Act to streamline the process, to reduce requirements for written descriptions, and to clarify and expedite procedures for approval of conservation agreements.
    • The EPA will undertake 31 regulatory reviews for its initial review period. Sixteen of them fit into the category of “early actions,” meaning the agency intends to take a specific step which could lead to modifying, streamlining, expanding or repealing a regulation or related program during the 2011 calendar year. The other 15 reviews are longer term actions. The following 16 are early actions that are intended to yield in 2011 a specific step toward modifying a regulation. A majority of the “early actions” came from suggestions from one or more public comments:

      1. Lead Renovation, Repair, and Painting Program: considering new post-work requirements designed to  ensure cleaning meets clearance standards
      2. Sanitary Sewer Overflow (SSO) and peak flow wet weather discharges: clarifying permitting requirements
      3. Vehicle fuel vapor recovery systems: eliminating redundancy
      4. Gasoline and diesel regulations: reducing reporting and recordkeeping
      5. Regulatory certainty for farmers: working with the U.S. Department of Agriculture and states
      6. Modern science and technology methods in the chemical regulation arena: reducing whole-animal testing, reducing costs and burdens and improving efficiencies
      7. Electronic online reporting of health and safety data under the Toxic Substances Control Act (TSCA); Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA); and Federal Food, Drug, and Cosmetic Act (FFDCA): reducing burden and improving efficiencies
      8. National Priorities List rules: improving transparency
      9. Quick changes to some TSCA reporting requirements: reducing burden
      10. Integrated pesticide registration reviews: reducing burden and improving efficiencies
      11. National Pollutant Discharge Elimination System (NPDES): coordinating permit requirements and removing outdated requirements
      12. Vehicle regulations: harmonizing requirements for: a. fuel economy labels, b. greenhouse gas and fuel economy standards, c. vehicle emission standards
      13. Multiple air pollutants: coordinating emission reduction regulations and using innovative technologies
      14. New Source Performance Standards (NSPS) reviews and revisions: setting priorities to ensure updates to outdated technologies
      15. Innovative technology: seeking to spur new markets and utilize technological innovations
      16. The costs of regulations: improving cost estimates

      The EPA intends to further consult with the public on this plan in June.

    Financial Services

    LEGISLATIVE ACTIVITY

    • House Budget Committee to Discuss GSEs. On Thursday, June 2, the House Budget Committee (Paul Ryan (R-WI), Chairman) will hold a hearing titled, “Fannie Mae, Freddie Mac & FHA: Taxpayer Exposure in the Housing Markets.” The witnesses will include Deborah Lucas, Assistant Director at the Congressional Budget Office and Alex Pollock, a Senior Fellow at the American Enterprise Institute for Public Policy Research.
    • Secretary Geithner to Appear Before House Financial Services Committee. On Wednesday, June 1, Treasury Secretary Timothy Geithner will testify before the House Financial Services Committee to discuss the state of the international financial system.
    • House Financial Services Subcommittee to Discuss Federal Reserve Transparency. On Wednesday, June 1, the House Financial Services Domestic Monetary Policy and Technology Subcommittee (Ron Paul (R-TX), Chairman) will hold a hearing titled, “Federal Reserve Lending Disclosure: FOIA, Dodd-Frank, and the Data Dump.”

    REGULATORY ACTIVITY

    • CFTC to Hold Roundtable to Discuss Cleared Swaps Collateral. On Friday, June 3, the Commodity Futures Trading Commission (CFTC) will hold a public roundtable to discuss issues related to the protection of cleared swaps customer collateral. The roundtable will assist the CFTC in the rulemaking process to implement the Dodd-Frank Wall Street Reform and Consumer Protection Act.
    • CFTC to Hold Roundtable to Discuss UPIs, Swap Data Recordkeeping and Reporting Requirements. On Wednesday, June 8, the Commodity CFTC will hold a public roundtable to discuss technical aspects of implementing infrastructures for issuance and maintenance of Unique Product Identifiers, as they apply to CFTC’s proposed swap data recordkeeping and reporting rules, as well as other CFTC proposed rules, with a focus on the products and entities under the CFTC’s jurisdiction.

    OTHER FINANCIAL SERVICES NEWS

    • Chrysler Repays TARP Loan. On Tuesday, May 24, Treasury Department announced that the Chrysler Group LLC repaid its outstanding Troubled Asset Relief Program (TARP) loans. The $10.6 billion loan was paid back more than six years before its 2017 scheduled maturity.

     


    Health Care

    LEGISLATIVE ACTIVITY

    • House Energy and Commerce Hearing. The House Committee on Energy and Commerce Subcommittee on Health scheduled a hearing on Thursday, June 2, at 2:00 p.m., titled “PPACA’s Effects on Maintaining Health Coverage and Jobs: A Review of the Health Care Law’s Regulatory Burden.”
    • Oversight and Government Reform Hearing. The House Committee on Oversight and Government Reform Subcommittee on Healthcare and DC will hold a hearing on Thursday, June 2, at 1:30 p.m., titled, “FDA Medical Device Approval: Is There a Better Way?”
    • House Ed and Workforce Hearing. The House Committee on Education and the Workforce Subcommittee on Health, Employment, Labor, and Pensions is holding a field hearing on Tuesday, June 7 titled “The Recent Health Care Law: Consequences for Indiana Families and Workers,” scheduled at 9:00 a.m. (Central) in the Vanderburgh County Civic Center, 1 Martin Luther King Jr. Blvd., Evansville, IN.

    REGULATORY ACTIVITY

    • Proposed Changes to the Electronic Prescribing Incentive Program. The Centers for Medicare and Medicaid Services (CMS) released a proposed rule that would modify the 2011 electronic prescribing (eRx) quality measure (that is, the eRx quality measure used for certain reporting periods in calendar year (CY) 2011), to provide additional significant hardship exemption categories for eligible professionals and group practices to request an exemption during 2011 for the 2012 eRx payment adjustment due to a significant hardship.  The proposed rule would also extend the deadline for submitting requests for consideration for the two significant hardship exemption categories for the 2012 eRx payment adjustment that were finalized in the CY 2011 Medicare Physician Fee Schedule (PFS) final rule. Public comments will be received for 60 days.
    • HIPAA Privacy Rule Accounting of Disclosures under the Health Information Technology for Economic and Clinical Health Act. The U.S. Department of Health and Human Services released a proposed rule to modify the Health Insurance Portability and Accountability Act of 1996 (HIPAA) Privacy Rule’s standard for accounting of disclosures of protected health information. The purpose of these modifications is, in part, to implement the statutory requirement under the Health Information Technology for Economic and Clinical Health Act (HITECH Act or the Act) to require covered entities and business associates to account for disclosures of protected health information to carry out treatment, payment, and health care operations if such disclosures are through an electronic health record. Public comments will be accepted for 60 days.
    • Permanent Certification Program for Health Information Technology. HHS released a proposed rule under the authority granted to the National Coordinator for Health Information Technology (the National Coordinator) by section 3001(c)(5) of the Public Health Service Act (PHSA) as added by the Health Information Technology for Economic and Clinical Health (HITECH) Act. The rule proposes a process for addressing instances when the ONC-Approved Accreditor (ONC-AA) engages in improper conduct or does not perform its responsibilities under the permanent certification program. The rule also proposes to address the status of ONC Authorized Certification Bodies (ONC-ACBs) in instances where there may be a change in the accreditation organization serving as the ONC-AA and clarifies the responsibilities of the new ONC-AA.

    OTHER HEALTH NEWS

    • Institute of Medicine. The Institute of Medicine Committee on Geographic Adjustment Factors in Medicare Payment will release its first report to the public at the National Press Club on Wednesday, June 1, at 1:00 p.m. The Committee was charged to evaluate the accuracy of the geographic adjustment factors used for Medicare payments at the request of HHS and CMS. This first report will evaluate the accuracy of geographic adjustment factors and the methodology and data used to calculate them. The second report, expected in spring 2012, will evaluate the effects of the adjustment factors on the distribution of the health care workforce, quality of care, population health and the ability to provide efficient, high-value care.
    • Vermont Health Law. Governor Pete Shumlin of Vermont signed into law a bill to establish a state-sponsored insurance plan called “Green Mountain Care,” which is the nation’s first single payer health care system. The program is open to all Vermont residents, where services would be billed to the state. A board appointed by the Governor will be responsible for determining benefits and setting reimbursement rates.

     


    International, Defense, Homeland Security

    • Israel/Palestine. President Obama’s statement earlier this week regarding his proposed baseline for Israeli-Palestinian negotiations so far has arguably spurred more of a reaction in the United States than in Israel, the Palestinian Authority or the wider Middle East. The President called for peace talks with pre-1967 borders as a starting point, with subsequent “land swaps, mutually agreed” as part of a final agreement, without including previous Administrations’ formulations that accounted for intervening developments on the ground. Although senior Administration officials later tried to soften President Obama’s remarks by noting that Israel undoubtedly would be able to maintain certain strategic positions in final status discussions, Congressional leaders on both sides of the aisle, including Senate Majority Leader Harry Reid (D-NV) and House Majority Leader Eric Cantor (R-VA), were quick to criticize the White House’s position. Israeli Prime Minister Benjamin Netanyahu capitalized on the environment in his speech to a joint session of Congress, citing Israel’s “indefensible” borders and lack of governance over holy sites in Jerusalem prior to the Six-Day War. However, to this point, public opinion polling in Israel indicates that a majority of Israelis would have preferred Prime Minister Netanyahu to be more amenable to President Obama’s position, given that a majority in Israel supports the concept of compromise to achieve a final peace deal. Meanwhile, the President’s remarks appeared to have even less of an impact in the Palestinian Authority (PA) and the rest of the Arab world. The Palestinians instead remain focused on the finer points of Fatah-Hamas unity negotiations and a most-likely futile attempt to seek diplomatic recognition through the UN. While analysts and government officials elsewhere in the Middle East have expressed varying degrees of appreciation for the Obama Administration’s position, they also view the President’s remarks, even if they are accompanied by expanded U.S. diplomatic engagement, as having little practical effect for the time being.
    • Libya. The Obama Administration is experiencing a disconnect on Libya policy eerily similar to the Clinton Administration’s experiences with Bosnia in 1995 and Kosovo in 1999. On the one hand, increased political unity within NATO has helped to spur increased policy coherency and corresponding military achievements in the Alliance’s air campaign recently. On the other hand, both Republican and Democratic members of Congress appear increasingly agitated over the Administration’s inattention to the expiration of the War Powers Act’s 60 day deadline for consultations with Congress following the onset of a combat mission. It is not surprising that the White House failed to act in accordance with the War Powers Act’s specific provisions, as Republican and Democratic Administrations have routinely questioned the law’s constitutionality. However, the Obama Administration’s minimalist approach to consultations with Congress over Libya has endangered the chances for a Congressional resolution that would be broadly supportive of the Administration’s Libya policy. An indication of Congress’s souring mood on the Administration’s approach to Libya occurred during Thursday’s House floor vote of the FY12 defense bill, in which an amendment to bar the use of funds for almost all possible deployments of U.S. ground troops in Libya passed by a margin of 416 in favor to five opposed. The Obama Administration certainly has expressed no desire for ground troops, but would prefer to keep the option open. Instead, the House has signaled that it is prepared to oversee Libya operations more closely, especially if the White House does not meet Congress halfway via consultations.

     


    Tax

    LEGISLATIVE ACTIVITY

    • Tax Reform Included in House GOP Jobs Plan. A recently released House Republican plan to encourage job growth includes certain elements of tax reform. The proposal would lower the top individual and corporate tax rates to 25 percent and provide for a repatriation holiday allowing U.S. multinational corporations to bring back offshore profits at a reduced tax rate. House Democrats criticized the proposal, with House Ways & Means Committee Ranking Member Sandy Levin (D-MI) warning that cuts to the top rates would require elimination of popular tax breaks.
    • Debate on Repatriation Holiday Continues. The dialogue surrounding a potential repatriation holiday continued this week, with House Ways & Means Committee Chairman Dave Camp (R-MI) expressing his support for a holiday in the context of discussions on the House Republican jobs proposal. Earlier in the month, House Ways & Means Committee member Representative Kevin Brady (R-TX) and Representative Jim Matheson (D-UT) introduced legislation (H.R. 1834) that would allow multinational companies to temporarily repatriate overseas earnings at a significantly reduced 5.25 percent tax rate. To ensure domestic job growth, the legislation would penalize any company that simultaneously repatriates earnings at the reduced rate and reduces its U.S.-based workforce. Specifically, a penalty would be imposed if a company reduces its average employment level in the two-year period following the holiday. The total penalty could not exceed the repatriation benefit taken by the corporation.
    • House Ways & Mean Committee Hearing to Discuss Impact of Tax Reform on Jobs. On Thursday, June 2, the House Ways & Means Committee will hold another in a series of hearings on tax reform. Prior hearings have focused on the ability of U.S. multinational corporations to compete in the global marketplace, while the June 2 hearing will discuss how tax reform policies can encourage domestic job growth.

    REGULATORY ACTIVITY

    • Geithner Suggests Corporate Tax Reform Possible in 2011. During a speech earlier this week, Treasury Secretary Timothy Geithner suggested the possibility of completing corporate tax reform before the end of this year. He also reiterated the Administration’s position that tax reform should not be a part of the current budget negotiations on the debt ceiling. Secretary Geithner has indicated that moving to a lower corporate tax rate (in-line with other OECD countries) is a priority goal, which should be paid for by eliminating a host of deductions, credits, and preferences currently in the Code.
    • FATCA Implementation. On Wednesday, May 25, officials in Treasury’s Office of Tax Policy indicated that Treasury is considering the appropriate structure for addressing partnerships and other passthrough entities, among other issues, under the disclosure regime established by the Foreign Account Tax Compliance Act (FATCA). The law, which was enacted as part of the Hiring Incentives to Restore Employment (HIRE) Act, imposes broad requirements on foreign financial institutions to disclose U.S.-owned accounts to the Internal Revenue Service. Proposed regulations are expected to be issued later this year.

    OTHER TAX NEWS

    • No Appointment yet for Key Treasury Position. The Administration has not yet appointed a replacement for Michael Mundaca, who left his post as Treasury’s Assistant Secretary for Tax Policy earlier this month. Emily McMahon, Deputy Assistant Secretary for Tax Policy, and Mark Mazur, Deputy Assistant Secretary for Tax Analysis, continue to fill Mundaca's role.

    TechComm

    • AT&T/T-Mobile Merger. Two senior members of Congress came out in opposition of AT&T’s proposed acquisition of T-Mobile USA on Wednesday, May 25. Representative Ed Markey (D-MA), a senior member of the House Energy and Commerce Committee and House Judiciary Ranking Member John Conyers, (D-MI), called on regulators to block the proposed merger. Conyers was joined at a press conference by Gigi Sohn of Public Interest, Parul Desai of the Consumers Union, and Aparna Sridhar of Free Press – all opponents of the merger.  The Judiciary Intellectual Property, Competition, and the Internet Subcommittee held the first House hearing on the merger on Thursday, May 26, calling on AT&T Chairman, President, and CEO Randall Stephenson; Rene Obermann, CEO of T-Mobile USA’s parent company, Deutsche Telekom along with Desai; Rural Cellular Association President Steven Berry; and law professors from George Mason and Howard Universities.   Among the key issues for Subcommittee members were the necessity of the merger given AT&T’s existing spectrum holdings; wholesale competition for backhaul; AT&T’s commitment to enter into and honor existing roaming agreements; interoperability; AT&T’s pledge to provide 97 percent of rural America with broadband post-merger; and the potential for job losses resulting from the transaction.

      Markey, who wrote legislation in 1993 requiring the release of 200 megahertz of spectrum for private-sector uses such as mobile phones, said that approval of the AT&T/T-Mobile merger would return the country to a time when the nation’s wireless market was dominated by two players that had little incentive to innovate or lower prices. Some critics worry that if AT&T acquires T-Mobile, Verizon Wireless, currently the top wireless provider, would seek to buy Sprint, the nation’s third-largest wireless carrier, leaving just two national wireless providers.
      More hearings on the merger are expected to take place soon before the House and Senate commerce committees, which have jurisdiction over the Federal Communications Commission (FCC) and its merger review.
    • Spectrum. A markup on Senate Commerce Committee Chairman Jay Rockefeller’s (D-WV) comprehensive spectrum bill is expected the week of June 6. Meanwhile, House Republicans on the Energy and Commerce Committee’s Communications and Technology Subcommittee last week expressed skepticism with proposals to reallocate the 700 MHz D-block spectrum to public safety and provide funding for a nationwide broadband network. One after another, the lawmakers said that the public safety community has already been allocated spectrum for its exclusive use, including 24 MHz in the 700 MHz band, and they questioned whether they need more – especially when current frequencies are not fully utilized. A number of the members also stressed the importance of governance. However, many of the lawmakers did not seem to understand how the spectrum was currently being used – including that 12 MHz of the 24 MHz allocated in the 700 MHz band was for voice communications and that those capabilities currently are not available in a mission-critical way over 4G LTE (long term evolution) networks. Some public safety leaders expressed frustration after the hearing by the apparent confusion of lawmakers.

      For their part, Democrats on the panel expressed support for legislation that Senators Rockefeller and Hutchison, the respective Chairman and Ranking Member of the Senate Commerce, Science, and Transportation Committee, hope to mark up soon. The draft Senate measure would reallocate the D-block to public safety, authorize the FCC to hold incentive auctions and reserve $12 billion to pay for the deployment of a nationwide public safety network. It would also establish a nonprofit corporation to hold the license for the public safety spectrum and oversee the construction and operation of the network.

      The FCC continues to discuss how to implement incentive auctions if Congress grants the authority. Last week, broadcaster LIN Television held meetings with the FCC staff and Commissioner Robert McDowell during which the company argued that the incentive auction proposal creates risks for broadcasters that choose not to participate in the auctions. However, LIN also indicated that it may be more open to incentive auctions if there was "serious movement on broadcast ownership deregulation."

      Meanwhile, Bill Lake, FCC Media Bureau Chief, has stated that incentive auction models could be available in a few months or later this summer. Comments were due last week on the FCC’s draft Statement of Work regarding the design of an auction mechanism for clearing and reassigning spectrum.
    • Intellectual Property. On May 26, the Senate Judiciary Committee approved by voice vote S. 968, the Preventing Real Online Threats to Economic Creativity and Theft of Intellectual Property Act – or PROTECT IP Act – to protect against websites that purvey solely or primarily in copyrighted material. The bill –  sponsored by Committee Chairman Patrick Leahy (D-VT), former Chairman Orrin Hatch (R-UT) and Ranking Member Chuck Grassley (R-IA): 1) narrows the definition of rogue websites to apply to only those sites that are used “solely or primarily for infringing activities”; 2) authorizes the Department of Justice (DOJ) to serve court orders on search engines, in addition to payment processors, advertising networks and ISPs to block the underlying domain names of infringing websites; 3) authorizes the DOJ to bring legal action against online infringers; and 4) gives individual rights holders a private right of action against online copyright infringers. Leahy said the bill is intended to “protect the investment of American companies . . .  in developing brands and creating content, and will protect the jobs associated with those investments.” Upon its approval, however, Senator Ron Wyden (D-OR) voiced his opposition to the Committee’s action and immediately put a hold on S. 968 – preventing further Senate consideration until the hold is released. Upon placing the hold, Wyden said the current bill takes an “overreaching approach to policing the Internet” and would hurt “speech, innovation and the very integrity of the Internet.” Further, Wyden said that while he agrees with the bill’s goals, he is not willing “to muzzle speech and stifle innovation and economic growth to achieve this objective.”
    • FCC June 9 Open Meeting. The FCC’s tentative agenda for its Thursday, June 9 meeting includes the following items: Electronic Tariff Filing System Report and Order; Wider Channel Bandwidths for Broadband Radio Service (BRS) FNPRM; Space Path Interference (between the 17/24 GHz BSS space stations and DBS) Report and Order; and Maritime Automatic Identification Systems Order. A formal agenda will be released a week before the meeting.

      Hearings scheduled for next week include:
    • May 31, 4:00 p.m. – House Judiciary Subcommittee on Courts, Commercial and Administrative Law titled, “Formal Rulemaking and Judicial Review: Protecting Jobs and the Economy with Greater Regulatory Transparency and Accountability.”
    • June 1, 10:30 a.m. – House Energy and Commerce Subcommittee on Communications and Technology titled, “Promoting Broadband, Jobs and Economic Growth Through Commercial Spectrum Auctions.”